We do not believe that the relationship broke down to the extent that is claimed.
There were two levels of engagement. First, there were weekly and monthly meetings in the yard with its senior management team, which Jim Anderson attended. Those meetings carried on without fault up until the middle of August 2019, when the yard went into administration. There was no problem there whatsoever.
Secondly, I used to regularly meet the first managing director, and I then regularly met the second managing director, or chief executive officer, who gave evidence to the committee a few weeks ago. We kept on meeting regularly but, around the time of Easter 2017, that changed and things became a little bit difficult and fractious. Jim and I were dragged into the war room and read the riot act by the owner of the business, who said, “You keep saying that we are not performing, but we are performing and we guarantee you that we will deliver the ships in May and July 2018.” We said, “In our professional opinion, bearing in mind that we have been around shipyards for years and years, there is no chance of that.” We were dismissed and marched out of the office.
That is absolutely fine but, to fast forward a couple of months to 7 July, the claim for £17,535,950—to be exact—was suddenly handed across the table and we were told, “That is what you owe us.” As members can imagine, our reaction was absolute horror, because everything was fine up until that point and there was nothing in the change order process that indicated that there was a problem. However, all of a sudden, there was a major problem.
We are professionals, we have legal advisers and we deal with civil engineering and shipbuilding contracts in our organisation. With that quantum of claim, we moved into a pre-litigation phase at that point. When parties are in a pre-litigation phase, it is not that they do not talk to each another; they follow up conversations with letters. I believe that the team from Ferguson’s that was here giving evidence a couple of weeks ago also said that. I think that it said something like, “Kevin is quite nice face to face, but we did not like the way that he wrote to us.” However, the way in which we wrote to Ferguson’s had to be legalistic, because the claim of £17,535,950 had changed to £28.4 million by August, and it changed to £66 million by 20 December 2018.
In the terms of the contract, there are three mechanisms: mediation, expert determination and court—the Court of Session in Scotland. The claim went from £17 million to £28 million to £66 million, and £66 million took us only to the end of August 2018. Our projection at that stage was that the claim could be double that number by the end of the contract. We said to the shipyard, “If you believe this, please take us to court.” We almost pleaded with it to take us to court.
The interesting thing is that the shipyard gave verbal evidence to the committee and sent it a huge package of documents from a company called HKA. The documents cost £650,000 to create, which was probably £650,000 that it did not have. Where did that end up?
Up until the point of administration, we said again and again, “If you believe that you have a valid claim, please take us to court,” but Ferguson’s never did. Clyde Blowers Capital/FMEL is probably one of the most sophisticated companies in Scotland, but it never took us to court. In effect, we rebutted the claim completely. I am prepared to use these words: that whole claim was a work of fiction. We had our own professional feelings about it, and we were advised by legal advisers and a senior Queen’s counsel in Scotland. We even went to people in London to ask whether we had got it wrong. The answer was, “No, you haven’t. There is no claim.” Despite asking the shipyard repeatedly to take us to court, it never did. Why not? That is because it knew that the claim had no validity either technically or in contractual law—end of story.